A Section 9A (S9A) schedule letter from HMRC is a formal notice of enquiry into a submitted tax return, issued under Section 9A of the Taxes Management Act 1970. It means HMRC has chosen to review specific aspects—or potentially the entirety—of a taxpayer’s return to ensure accuracy and compliance.

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What the Letter Means

• HMRC is exercising its legal right to investigate a tax return.

• The enquiry can relate to the original submission or any amendments made.

• The letter will specify which tax year is under review and may outline the areas of concern (e.g. business expenses, income sources).

 

Time Limits

• HMRC must issue the S9A notice within 12 months of the return being filed.

• Only one enquiry can be opened per return, unless fraud or serious error is suspected.

 

Types of Enquiries

• Aspect enquiry: Focuses on specific items (e.g. travel expenses, capital gains).

• Full enquiry: Reviews the entire return and supporting records.

 

What You Should Do

• Respond promptly and professionally.

• Provide clear explanations and supporting documentation.

• Consider seeking professional representation—especially if the enquiry is complex or involves potential penalties.

 

Common Reasons for a Section 9A Enquiry

• Unusual or high expense claims (e.g. vehicle or phone usage that seems disproportionate to income)

• Inconsistencies between reported income and data reported on the return (such as between HMRC records and your CIS statements))

• Random selection as part of HMRC’s routine compliance checks

• Late or amended returns, which may prompt closer scrutiny

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Why CIS Statements Are Important during the Inquiry

These statements are essential because:

• They prove tax has been deducted and paid to HMRC

• They support Self Assessment tax returns and help avoid under- or over-reporting

• They are required for claiming refunds on overpaid tax

• They demonstrate compliance and transparency during HMRC audits

• Contractors are legally obligated to issue them within 14 days of each tax month’s end

 

Advice for Handling CIS Statements During an HMRC Inquiry

• Gather All Monthly Statements Promptly. Ensure you have a complete set for the tax year under review. Missing months can raise red flags.

• Cross-Check Against Bank Statements and/or Accounting Software. Confirm that the amounts match actual payments and deductions. Discrepancies should be explained clearly.

• Highlight Verification Numbers and UTR. These help HMRC confirm the subcontractor’s tax status and deduction rate.

• Include CIS Statements in Your Response Pack. When replying to HMRC, attach the relevant CIS statements as supporting evidence. Label them clearly by tax month.

• Explain Any Irregularities. If deductions vary or a subcontractor was paid gross, provide context (e.g. verification status, materials supplied).

• Use Software to Track and Export Statements. Many platforms like Xero, QuickBooks, or FreeAgent allow easy generation of CIS reports. This improves accuracy and audit readiness.

 

How to Reduce the Risk of a Tax Enquiry from HMRC

Protect your business by following these simple best practices.

1. Keep Accurate and Consistent Records

• Use MTD-compatible accounting software

• Reconcile income and expenses with bank statements

• Avoid discrepancies between tax returns and financial reports

2. Submit on Time and Avoid Amendments

• File returns before the deadline

• Limit post-submission changes unless strictly necessary

• Track submission receipts and confirmation emails

3. Justify Your Expense Claims Clearly

• Only claim expenses that are wholly and exclusively for business use

• Apportion mixed-use costs (e.g. vehicles, phones) with clear reasoning

• Keep mileage logs, call logs, or timesheets if relevant

4. Provide Supporting Documentation

• Maintain receipts, invoices, and contracts

• Save work-related correspondence and shift reports

• Be ready to explain high or unusual claims

5. Benchmark Your Business

• Know what’s typical in your sector—income patterns, expense levels, profit margins

• If figures deviate from the norm, prepare a short explanation for your accountant or HMRC

6. Stay Digitally Compliant

• Embrace Making Tax Digital requirements

• Submit quarterly updates via approved software

• Transition early to avoid a last-minute rush

7. Work With a Professional Accountant

• Ensure your returns are professionally reviewed

• Ask about industry-specific risks and changes in HMRC policies

• Get tailored advice on minimising audit risk

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Whether it’s a letter through the door or a hunch that things aren’t right—get in touch early. The sooner we act, the stronger your position.

Get in touch today to discuss your circumstances:

Email: info@accounted4tax.co.uk

Phone/WhatsApp: +447563811938